Are Agency Workers Entitled to Equal Pay with Comparable Permanent Employees?
Unclear provisions concerning hours of work in agency worker contracts allowed for equal pay claims with reference to comparable permanent employees of the hirer.
Legal Background
The Agency Workers Regulations 2010 (AWR) entitle agency workers to the same basic pay and conditions as comparable employees recruited directly by the hirer after a 12-week qualifying period.
The AWR also include an exemption from this principle of equal treatment in relation to pay. This is known as the 'Swedish Derogation', where under a permanent contract of employment between an agency worker and temporary work agency, the agency worker continues to be paid a minimum amount between assignments. For this to apply, the contract must contain certain terms including 'the expected hours of work during any assignment'.
Twenty-Four Seven Recruitment Services Limited & Ors v Afonso & Ors
In this case, 191 claimants argued that they were entitled to the same pay conditions as the employees of their hirer. The Temporary Work Agencies sought to rely on clauses in the workers' employment contracts which allowed them to apply the 'Swedish Derogation'.
The terms of the contracts stated: "The Employee's expected hours of work on each Assignment are:- Any 5 days out of 7" or "Any 5 out of 7 days/nights as required".
The Employment Appeal Tribunal determined that this did not provide the agency worker with a clear figure for expected hours of work per week or for any other period. Despite the fact that the agency workers received pay between assignments and that other required conditions were present in the contracts, this lack of certainty meant that the 'Swedish Derogation' did not apply. As a result, the agency workers could claim equal pay with comparable employees of the hirers.
The Future of the 'Swedish Derogation'
As the AWR are derived from European Union legislation, post Brexit we could see changes to the regulations or their removal altogether. In its response to the Taylor Review of Modern Working Practices, the government has already given an indication that the 'Swedish Derogation' may be subject to change or removal.
The Review contends that the 'Swedish Derogation' is being abused by temporary work agencies and recommends changes so that agency workers are no longer able to opt out of equal pay entitlements. In its response, the government indicated that it would consult to determine the level of abuse and that if abuse was widespread it might be appropriate to repeal the derogation.
Best Practice
Although the future of the 'Swedish Derogation' remains unclear, in the short term at least, temporary working agencies should ensure that the terms and conditions of contracts with agency workers are clear and, in particular, refer to the expected number of hours per week or other period during the assignment.